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Most Big Banks Steering Clear of New Debit Card Fees

J.P. Morgan Chase & Co. is the latest to declare it will not charge customers a fee to use their cards.

October 27, 2011, 08:00 pm

NEW YORK -- When Bank of America announced a plan to charge its debit card users a $5 monthly fee in the wake of the Durbin Amendment's cap on debit swipe fees, other banks were watching to see what consumer reaction would be, and they appear to have learned from the public outcry that quickly followed. J.P. Morgan Chase & Co. is the latest bank to state that it will not charge its customers to use their debit cards, according to a Wall Street Journal report. Chase operates approximately 26.5 million checking accounts in the United States.

Other banks have recently stated similar intentions. U.S. Bancorp, Citigroup Inc., PNC Financial Services Group Inc., KeyCorp and others also do not plan to implement debit card fees.

"We looked at all options and quickly decided it didn't fit with our overall strategy," David Bowen, head of Key's consumer product business, told the WSJ.

Neither Chase nor the other banks cited the Bank of America fee-inspired furor, which prompted both federal and state lawmakers to craft legislation that would ban banks from assessing debit card fees, as a reason their decisions. Chase first began exploring the possibility in February, when it began testing $3 monthly fees in Georgia and Wisconsin. Although these test programs are ongoing, they are scheduled to conclude in mid-November and will not be renewed or expanded, according to the report.

Other banks continue to explore the possibility of fees for debit card users. Wells Fargo & Co. is still testing a $3 monthly fee in five states, which prompted Sen. Richard Durbin (D-Ill.) to write to Chief Executive John Stumpf last week.

"It is certainly surprising that your bank would pursue this fee strategy in light of the consumer reaction that has been prompted by Bank of America's recent imposition of a monthly debit fee on its customers. If you were hoping that your new fee would go unnoticed, it has not," Durbin wrote, according to his website. "It is unfortunate, though not surprising, that your bank is now blaming swipe fee reform for your decision to impose this significant new fee on your loyal customers."

Credit unions have reaped the benefits of the backlash against the fees, signing up as many as twice their normal rate of new customers, the WSJ report noted.

Consumer reaction is providing clear feedback to bank officials. "Our customers said that would be a massive source of irritation for them," said Stephen Troutner, head of consumer and small business banking for Citigroup. "Any time you hear that kind of emphatic feedback from customers, you've got to listen to them."